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J.D. Power and Associates Reports:
Mortgage Brokers Provide Valuable Service for Home Loan Customers
USAA Ranks Highest in Mortgage Customer Satisfaction for Third Consecutive Year
FOR IMMEDIATE RELEASE: November 11, 2004
WESTLAKE VILLAGE, Calif.—Although slightly fewer than one-third of mortgage shoppers use a broker to help them find their current mortgage, those customers who do tend to be very satisfied with the lending experience, according to the J.D. Power and Associates 2005 Home Mortgage StudySM released today.
Among consumers who responded to the survey, 29 percent indicate that they contacted a broker to help them find their current mortgage. Those customers who used a broker tend to be substantially more satisfied with the broker personnel compared with those who interfaced directly with the lender’s personnel.
"Brokers appear to perform significantly better in meeting customer expectations," said Jeremy Bowler, director of the finance and insurance practice at J.D. Power and Associates. "Brokers are perhaps more dependent on customer referrals than the direct lenders. As a result, brokers may be more in tune with the cause and effect of customer satisfaction and advocacy."
However, those customers who contact a broker while shopping but then apply directly to an originating lender appear to be the most satisfied with the mortgage origination experience.
"While this is the case for only 5 percent of all mortgage customers, those direct-to-lender customers who comparison shopped with at least one broker rate both the lender personnel and the loan application and approval process higher than do customers who never contacted a broker in their shopping process," Bowler said.
The study’s Customer Satisfaction Index is based on four key factors of the mortgage lending process. Day-to-day administration of the account is the most important factor, accounting for 32 percent of overall mortgage service satisfaction. Billing and payment experiences are nearly as important (30 percent), followed by the loan origination process (21 percent) and the customer-initiated contact experience (16 percent).
"With rates on the rise, lenders have seen a decline in call-center call volumes from shoppers," Bowler said. "However, for those customers who do contact their lender with a question or problem, the way the lender handles their needs is critical in influencing their long-term impressions of the lender, and their likelihood to consider their current service provider the next time they’re in the market for a home loan."
Timely resolution of a problem has the greatest impact on customer contact satisfaction. The longer it takes to resolve a problem, the lower a customer’s satisfaction is with their contact experience. About one-half of all problems are remedied within three days, but customer satisfaction declines dramatically when a problem takes more than one week to resolve.
"This can have a profound impact on customer loyalty and customer recommendations," Bowler said. "The likelihood that a customer will offer a personal recommendation for their loan service provider decreases by almost one-half when they are not completely satisfied with their lender."
Among consumers who rate their lender a nine overall on a 10-point scale, only two in five indicate they will definitely recommend their lender to others.
For the third consecutive year, USAA ranks highest in overall customer satisfaction. World Savings and Branch Banking & Trust follow USAA in the rankings. Bank of America and Cendant make substantial year-over-year improvements in the study, climbing to fourth and fifth rank positions, respectively.
The 2005 Home Mortgage Study is based on responses from more than 11,000 home mortgage customers. A more detailed listing of the results by mortgage provider is available at the J.D. Power Consumer Center.
Headquartered in Westlake Village, Calif., J.D. Power and Associates is an ISO 9001-registered global marketing information services firm operating in key business sectors including market research, forecasting, consulting, training and customer satisfaction.
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New Study:Consumers Pay Lower Annual Percentage Rates With Mortgage Brokers, Not Mortgage Lenders
* Dr. Gregory Elliehausen of the Georgetown University Credit Research Center presented his findings to a Federal Reserve Board Conference on Thursday, April 7th
MCLEAN, Va., April 7 /PRNewswire/ -- The National Association of Mortgage Brokers (NAMB) today announced its support of the findings of Dr. Gregory Elliehausen of the Georgetown University Credit Research Center. The report stated that brokers' customers have a lower APR, on average, than bank customers. Dr. Elliehausen presented his findings today to a Federal Reserve Board Conference.
"We commend Dr. Elliehausen's detailed research on this very important topic," said NAMB President Bob Armbruster. "We have always believed that the customer who works with mortgage brokers, especially NAMB-affiliated mortgage brokers, receives some of the most favorable terms possible for mortgages. The findings of this report simply prove what NAMB has known for years.
The conclusions of the report are:
* Estimates indicate that borrowers obtaining subprime mortgages through brokers paid lower annual percentage rates than borrowers obtaining subprime mortgages from creditors.
* The results support the hypothesis that through competition, brokers tend to pass their origination cost advantages to the consumer.
* The results challenge the view that loans from brokers are more expensive because of broker steering.
* Although the report's findings will not apply to every individual case, there is an overall price benefit to using brokers.
* The benefits of brokers also appear to hold for vulnerable market segments.
''For consumers, working with a mortgage broker who is affiliated with NAMB is a key tool to help protect oneself against fraud or abusive financial practices," adds Armbruster. "The more consumers know what resources to use, the better informed they will be in getting the best mortgage possible.''
The National Association of Mortgage Brokers (NAMB) is the voice of the mortgage broker industry with more than 24,000 members in all 50 states and the District of Columbia. NAMB provides education, certification and government affairs representation for the mortgage broker industry, which originates the majority of residential loans in the United States.
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